Section 57-62 BOFIA 2020

Section 57, 58, 59, 60, 61, and 62 of the Bank and Other Financial Institutions Act 2020 is under Part VII (ESTABLISHMENT OF SPECIALISED BANKS AND OTHER FINANCIAL INSTITUTIONS) of the Act.

Section 57 BOFIA 2020

Prohibition of Unlicensed Financial Institutions

(1) Without prejudice to the provisions of Chapter A of this Act, no person shall carry on specialized banking or business of other financial institution in Nigeria other than insurance, pension fund management, collective investment schemes and capital market business as defined respectively in the Insurance Act, the Pension Reform Act and the Investment and Securities Act except it is a company duly incorporated in Nigeria and holds a valid license granted under the provisions of this Act.

(2) In this section, “business of other financial institutions” include: business of a discount house, bureau de change, credit bureau, finance company or money brokerage,, international money transfer services, mortgage refinance company, mortgage guarantee company, credit guarantee, financial holding company or payment service providers and businesses whose objects include factoring, project financing, equipment leasing, debt administration, private ledger services, investment management, local purchases order financing, export finance, and such other business as the Bank may from time to time, designate, regardless of whether such businesses are conducted digitally, virtually or electronically only.

(3) Any person or institution which, before the commencement of this Act was carrying on any business of other financial institution, shall apply in writing to the Bank for a licence within 3 months of the date of commencement of this Act.

(4) Any person which fails to apply as provided in subsection (3) of this section, or who so applies and is not granted a licence within 3 months of such application shall cease to carry on such business of other financial institutions.

(5) Any person who conducts or is involved in conducting the business of other financial institutions without a valid licence in contravention of subsections (1) or (4) of this section is guilty of an offence and liable on conviction –
(a) in the case of a body corporate, to a fine of not less than N10,000,000 and an additional fine of not less than N200,000 for each day during which the infraction continues; and
(b) in any other case, to imprisonment for a term of not less than 5 years, or a fine of not less than N2,000,000 and an additional fine of not less than N50,000 for each day during which the infraction continues or to both such imprisonment and fine.

Section 58 BOFIA 2020

Application for licence

(1) Any person wishing to carry on the business of other financial business other than insurance and stock broking and pension fund management in Nigeria shall apply in writing to the Bank for the grant of a licence and shall accompany the application with the following:
(a) a feasibility report for the proposed financial business including the financial projections for at least 5 years;
(b) a draft copy of the memorandum and articles of association of the proposed financial business;
(c) such other information, documents and reports as the Bank may, from time to time, specify; and
(d) the prescribed non-refundable application fee

(2) After the applicant has provided all such information, documents and reports as the Bank may require under subsection (1) of this section, the Bank may grant the licence with or without conditions or refuse to grant the licence.

(3) Where a licence is granted, the Bank shall give written notice of that fact to the applicant and the licence fee shall be paid.

(4) The Bank may vary or revoke any conditions subject to which a licence was granted or may impose fresh or additional conditions to the grant of a licence.

(5) Any person who transacts a business without a valid licence under section 58 of this Act whether in the case of an individual or in the case of a body corporate is guilty of an offence and liable on conviction to imprisonment for a term of not less than 3years or a penalty of the higher of N10, 000,000 or two times the cumulative amount collected or both such imprisonment or fine.

Section 59 BOFIA 2020

Failure to comply with conditions of licence, etc.

(1) Any person who fails to comply with any of the conditions of a licence granted pursuant to section 58 shall be liable to a penalty of not less than N2,000,000 and an additional penalty of not less than N50,000 for each day during which the infraction continues.

(2) Every person carrying on any financial business referred to in Section 57 of this Act shall —
(a) comply with the monetary policy directives and other guidelines as the Bank may, from time to time, issue; and
(b) furnish within the stipulated time, any statistical and other returns as the Bank may, from time to time, require.

(3) Any person who fails to comply with the provisions of subsection (2) of this section is liable to a penalty of not less than N2,000,000 and an additional penalty of not less than N50,000 for each day during which such failure occurs.

(4) Any person who, being a director, manager or officer of a specialised bank or other financial institution, fails to take reasonable steps to secure compliance with any of the conditions of the licence of the bank is guilty of an offence and liable on conviction to imprisonment for a term of not less than 3 years or a fine of not less than N2, 000,000 and an additional penalty of N50, 000 for each day during which the infraction continues or to both such imprisonment and fine.

(5) Failure to comply with the guidelines or other directives of the Bank or refusal to supply returns in the prescribed form may be a ground for the revocation of a licence granted under this Act

Section 60 BOFIA 2020

Supervisory power of the Bank over other financial institutions and specialised banks

(1) Without prejudice to the provisions of sections 31 and 32 of this Act the Bank shall have power to(
(a) supervise and regulate the activities of other financial institutions and specialised banks;
(b) prescribe the minimum paid-up share capital requirement of other financial institutions and specialised banks.
(c) appoint examiners or any other person to carry out regular or routine examination of the books and affairs of specialised banks and other financial institutions.

(2) The Bank may appoint examiners and any other person to carry out regular or routine examination of the books and affairs of other financial institutions and specialised banks.

(3) Where the Governor is satisfied that it is in the public interest so to do, such person may, in addition to the routine or regular examination, order a special examination or investigation of the books and affairs of any other financial institution or specialised bank and for that purpose, the Governor shall have power to appoint one or more qualified persons other than the officers of the Bank to conduct special examination or investigation, under conditions of confidentiality of the books and affairs of such other financial institution or specialised bank .

(4) The cost and expenses of the Bank or the remuneration of the person so appointed, as the case may be, shall be payable from the fund and property of the other financial institution or or specialised bank.

(5) For the purpose of implementation of this section, other financial institutions and specialised banks shall be treated in the same manner as banks with respect to the requirements of section 23 of this Act.

Section 61 BOFIA 2020

Application of Chapter A

(1) Without prejudice to the foregoing provisions of this part, the provisions of Chapter A of this Act including all its offences, penalties and the powers of the Bank shall apply with such necessary modifications to specialised banks and other financial institutions.

(2) No person or authority other than the Bank shall as from the coming into force of this section exercise any regulatory or supervisory authority over specialised banks and other financial institutions.

(3) The Governor shall have power to appoint such expert or experts on non-interest banking or to constitute a panel of such experts to advice the Bank on matters of non-interest banking, as the Governor may from time to time
determine.

Section 62 BOFIA 2020

Management and control of failing specialised banks and other financial institutions

(1) Where the Bank is satisfied that a specialised bank or other financial institution is in a grave situation, the Governor may by order in writing exercise any one or more of the powers specified in section 34 of this Act.

(2) The Bank may grant advances to non-interest banks in a grave situation or which the Bank otherwise determines requires liquidity support on such terms other than as to interest as the Bank may deem fit.

(3) If after taking such of the steps stipulated in subsection (1) of this section or such other measures as in the opinion of the Bank may be appropriate in the circumstance, the state of affairs of the specialised bank or other financial institution concerned does not improve, the Bank shall have power to revoke the licence of such specialised bank or other financial institution.

(4) Any specialised bank or other financial institution whose licence is revoked pursuant to subsection (1) of this section shall be wound up by the Corporation or a person appointed by the Bank.

(5) The cost and expenses of the Bank or the remuneration of the person so appointed pursuant to subsection (1) of this section shall be payable from the fund and property of the specialised bank or other financial institution concerned.